Update: *Additional numbers added
Digby wrote a few days ago about the“grown-up” people coming to town to save America from the deficit. She listed a few of those people and their annual income.
Also, a few days ago the Senate had a vote on the tax cuts. Letting the Bush cuts go (I’m all for it and we can stop the payroll tax cut too as it is all stupid policy when the problem is declining wages/income going to labor) will return us to the Clinton years rates. People have noted just how little such a rise means to those at the top.
Well, in keeping with my define rich series and my series looking at the purpose of taxation, I thought wouldn’t it be interesting to see just what these 1%’ers might be paying if we went back to the beginning of the last great period of mass prosperity: 1936.
Yes indeedy, I say go for the brass ring. Let’s show our maturity and actually implement the lesson learned from our history, that period from around 1906 to 1932 and then 1936 to 1979.
While we’re at it, let us stop pretending that global trade is something new with an unknowable to man exotic force that we just have to accept as part of the expression of our DNA. There is RNA also (look it up).
The following numbers are based on the gross incomes Digby listed. Thus we’ll have to keep in mind that there have been no adjustments made for deductions in my calculations. So in truth, the tax paid would be less and the purchasing power of the actual non-adjusted income would be much greater. After all, the deductions represent benefits received from the income that was deducted including the government handout in the form of reduced taxes for various activities taken with one’s income.
Here is what it looks like:
All these men managed to hit the top marginal rate of 79%. Not one of them paid that amount. Notice how flat the percentage paid becomes. They want a flat tax, the got it. They just had to really, really perform to get to that level of tax nirvana in 1936. They couldn’t just pull a Lawrence Garfield, or should I say a Romney? They couldn’t just negotiate payment in stock, whack labor costs to increase the stock value, take that money and buy it’s competitors to the point of oligopoly and then move on. They could not just raid a solid company like New England Wire and Cable turning all the assets into cash at the expense of all the other relationships such a company had and justify it by saying “I make you money”. Greenmail? Junk Bonds?
I wrote about Caterpillar and their approach to negotiating with the commodity of labor. The average yearly income of the labor was $55,000/year. The multiples of the above net income range from 24.8 to 147.38. (* Multiples of the gross incomes range from 104.6 to 688.)
Granted, what’s left for these gentlemen would not allow the purchase of a new Cessna Citation X, but there was a 1999 listed for $5,950,000 when I search google. I think Mr. Sherill could afford the monthly payment on this. Though Cessna is offering the 4 passenger (the X is 12 passenger) at 0% interest for the first 12 months and Wiki says they list for only $2.65 million! You know, if buying used just curls your hair.
The point? There is nothing with the 1936 marginal tax rates that these men can not have other than more of it. Nothing. Real grown-ups who developed the 1936 tax table new this along with a lot of other stuff related income how it is actually earned and it’s social effect. All you have to do is lookat the tables and graphs to see that the marginal rates were not pulled out of selfish and self serving asses. They had a desired results in mind, one of which was to prevent “economic royalists”. I am confident the other desire was to take back rent collected from other peoples collective efforts in proportion to the lack of labor performed as one rises up the economic pyramid.
Have you heard the one about job creation? The one that asks: When was the last time a poor person gave you a job? When was the last time a CEO 1%’er’s activity saved the human race? Four people at least from 1928 to the patent granted in 1948 were involved in bring penicillin to the point ofcommercial viability. It was one woman’s work that allowed the next step of developing additional antibiotics.
When was the last time a CEO/1% er’s activity resulted in a leap of human progress? I’m thinking of my favorite non-CEO/Banker/1% example of flight. No, Gates and Jobs did not do it like the Wright Brothers did it.
1936. We responded in a way that attests to a time when we did learn from history and acted on lessons from history.